FIA会议要点：行业背景健康

1、Global Research17 March 2019US ExchangesFIA Conference Takeaways: Industry Backdrop Healthy but Current Volume Environment WeighsConference reiterates positive outlook; but soft volumes create downside risk Last week, we attended the 44th Annual International Futures Industry Conference. Regulation

2、remains the primary topic of the conference, and consistent with HYPERLINK /shared/d2YebDbFkjP our update HYPERLINK /shared/d2YebDbFkjP following the FIA Expo in October, we think that the backdrop has become more favorable over the last couple of years. The biggest near-term risk to the group remai

3、ns a slow volume environment, which continues to weigh on estimates. As such, we continue to prefer the less volume-sensitive names ICE and NDAQ over CBOE and CME.Exchanges still have decent downside risk from lower YTD volumesGlobal derivatives volumes grew some 20% last year to a new record, but t

4、he slower start to 2019 was a frequent topic at the conference. We do not believe that anything is broken, but that a less favorable environment has dampened activity. That said, we think that exchange stocks could remain in a tough spot with full-year volume estimates for 2019 still decently above

5、current run rates. Running YTD volume levels through our models for CBOE and CME would put our respective FY19 estimates 9% and 8% below consensus.Regulatory headwinds continue to easeOverall, conference participants gave the regulatory environment decent marks, noting that markets are safer and mor

6、e transparent today than they were prior to the global financial crisis, but that some rules (i.e., leverage ratio, cross-border) still need to be tweaked. Most importantly, while CFTC Chairman Giancarlo is due to leave the agency in a few months, we expect the more favorable direction during his te

7、rm to continue under new leadership.Highlights from management meetingsCBOE: M&A back in focus; growth left in proprietary products; platform migration nearing its end.CME: NEX integration progressing well; higher collateral charges coming; new retail offering.ICE: Data outlook solid; looking to bui

8、ld a comprehensive fixed income offering.NDAQ: Seeing strength across the business; update on Oslo; debating market data.Figure 1: Annual Global Derivatives VolumesDiversified FinancialAmericasEquitiesAlex Kramm, CFAAnalyst HYPERLINK mailto:alex.kramm alex.kramm+1-212-713 4060John Goode Associate An

9、alyst HYPERLINK mailto:john.goode john.goode+1-212-713 9413353025201510501995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Source: FIA, UBSNote: In billions of contracts; includes futures and options HYPERLINK /investmentresearch /

10、investmentresearchThis report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 18. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of intere

11、st that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.FIA Conference TakeawaysRegulatory headwinds continue to easeRegulation remains the primary topic of the conference, and consistent with HYPERLINK /s

12、hared/d2YebDbFkjP our HYPERLINK /shared/d2YebDbFkjP last update following the FIA Expo in October, we think that the backdrop has become more favorable over the last couple of years.Overall, conference participants graded the regulatory environment as a C+, noting that markets are safer and more tra

13、nsparent today than they were prior to the global financial crisis, but that some rules still need to be tweaked. Capital rules (leverage ratio) remain in focus in particular, but there seems to be a belief that rule makers are moving in the right direction. Areas to watch remain Brexit, cross- bord

14、er rules, and clearinghouse resiliency, in particular following the default in Nasdaq Nordics energy market. The US and Europe continue to move at different speeds, with Europe still having to implement some rules.ABCDFFigure 2: How would you grade the health of the industry in regards to regulation

15、?0%10%20%30%40%50%60%Source: FIA Conference participant pollA lack of competition and a concentration of clearing firms continues to come up as an area that has not worked. The vast majority of activity comes from some five clearing firms and the number of FCMs continues to shrink. The number of mar

16、ket makers in some asset classes (i.e., options) has also come down significantly. We believe a diverse set of market participants is critical for continued growth of exchange volumes over time.Figure 3: How would you grade the health of the industry in regards to concentration/competition?ABCDF0%5%

17、10%15%20%25%30%35%40%45%Source: FIA Conference participant pollFigure 4: Year-end Number of FCMs2001801601401201008060402002002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTDSource: CFTC, UBSNote: YTD count is as of January 2019CFTC leadership change should not a

18、lter directionCFTC Chairman Chris Giancarlo gave his HYPERLINK /PressRoom/SpeechesTestimony/opagiancarlo67 farewell remarks in Boca as his term at the CFTC will end in a few months. The Chairman reiterated his view that the path of the derivatives industry forward should largely be determined by mar

19、ket forces and that regulators should not be overly prescriptive. This was a key element of his agenda when he took the helm at the CFTC a couple of years ago, as previously noted: HYPERLINK /shared/d2ynCo7MxpLYV FIA Conference Takeaways: A New Regulatory Era?.There are still several items on the ag

20、enda before Mr. Giancarlo leaves the CFTC, including finishing swap trading rules, a final position limits rule, and various new cross-border agreements. The Chairman also noted that the industry is prepared for Brexit, which has been an area of concern over the last couple of years.Looking to the f

21、uture, the speech and side conversations we had with conference participants suggest that the direction of the CFTC will remain consistent when Heath Tarbert will likely take over as Chairman later this year. We believe that the initial direction of rule makers following the financial crisis was a n

22、egative for industry growth, as the CFTC and other regulators became more prescriptive. The turn in direction over the last couple of years has been a positive and we are hopeful that the industry will remain poised for further upside under new CFTC leadership.Record volumes in 2018; but slow start

23、in 2019Global derivatives volumes grew some 20% last year, making 2018 a record year for the industry. While last year was strong, the seemingly slow start to 2019 was a frequent topic of conversation at the conference. In fact, the volume picture drove the first question on the exchange leader pane

24、l.We did not hear anything that makes us believe that something is broken, but rather that macro forces have weighed on activity. Instead exchange leaders pointed to various factors including redemptions in cash markets that have flown through to derivatives activity, a convergence of views on impor

25、tant debates, and an overall calmer environment. Market participants may need a little time to adapt to the current environment, but things seem to be getting better, with improvements in some markets in March.Nonetheless, we believe that exchange stocks could remain in a tough spot after solid perf

26、ormance in 2018. While the stocks have already underperformed the market by a wide margin, our volume estimates for 2019 still remain decently above current run rates. As such, we continue to prefer the less volume-sensitive names ICE and NDAQ over CBOE and CME. In fact, running YTD volumes levels t

27、hrough our models would put our estimates for FY19 some 9% and 8% below consensus for CBOE and CME, respectively.Figure 5: Annual Global Derivatives Volumes353025201510501995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Source: FIA

28、, UBSNote: In billions of contracts; includes futures and optionsAsked about industry growth, conference participants pointed to China as an important driver going forward. Several exchanges, such as Eurex and SGX, have direct partnerships with China, and others have seen larger participation in the

29、ir markets from that region.On the negative side, excitement about interest rate markets seems to have faded. Interest rate volumes have been an important contributor of CMEs growth over the last few years, but with the Fed seemingly on hold, the picture may look a bit tougher for now.Crypto/Blockch

30、ain developmentsInterest rate volatility and LIBOR replacementChinas integration into global financial marketsListing of cannabis futuresOrganic growth of traditional futures/optionsFigure 6: What will be the largest contributor to growth of our industry in the next 3 years?0%5%10%15%20%25%30%35%40%

31、45%Source: FIA Conference participant pollCCP resiliency remains in focusAs expected, the default of a major clearing member in NDAQs Nordic power market in September and the following issues came up again during the conference HYPERLINK /shared/d2iIqKqWKDGdf (Nordic Default Highlights Risk of Over-

32、Diversified Business). NDAQ detailed its action plan to improve the resiliency of the CCP, including a more robust initial margin regime, a better membership framework with individual limits, and changes to its auction process.Overall, conference participants viewed the default as a good learning ex

33、perience for the industry, CCPs, and regulators alike. We expect the level of scrutiny to increase over time as industry participants become more focused on the risks in CCPs, concentration of margin, product liquidity, and default and auction processes. For example, a need for more transparency and

34、 a lack of consistency between the various CCPs came up as an area of frustration on one conference panel. Lastly, calls for more skin-in-the-game continue, but we do not think there is risk of a dramatic change in the regime.Highlight from company meetingsCboe Global Markets (CBOE)Figure 7: CBOE -

35、Revenues by type (2019E)Exchange services and connectivity 7%Market data fees16%Other8%Futures10%U.S. Equities 8%U.S. Options Trading9%Index Options 33%European EquitiesFX 5%4%Source: Company reports, UBS estimatesCBOE spent a lot of time in our meeting discussing its M&A ambitions. While the compan

36、y stressed that no deals are imminent, management highlighted that following the BATS acquisition it now has a more capable team in place to pursue acquisitions.While CBOE was historically more focused on bolt-ons, the company is now targeting medium- and large-sized deals that move the company clos

37、er to its clients, get deeper into certain assets classes (FX was mentioned as an example), and expand geographies. When it comes to potential deals, the company remains focused on market places as it believes that trading remains incredibly fragmented (i.e., OTC markets).The company does not shy aw

38、ay from increasing leverage, noting that it does not need to be an investment grade company. Total leverage could easily be in a 3x+ range.Management also attempted to give more detail about trends in its end markets. It acknowledged that volumes have been weaker YTD (improving a bit in March) and t

39、hat the trading community is still adjusting to a new environment. It still sees significant growth ahead for its proprietary products, including VIX. In fact, the company stressed that the events of 2018 have generated more interest in its various offerings.Figure 8: CBOE Quarterly CFE VolumesFigur

40、e 9: CBOE Quarterly Index Option Volumes4003503002502001501005003,0002,5002,0001,5001,0005001Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q18 QTD1Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q18 QTD0Source: Company reports, OCC, UBS Notes: Average daily volume in 000sSo

41、urce: Company reports, OCC, UBS Notes: Average daily volume in 000sFigure 10: CBOE Quarterly SPX Option VolumesFigure 11: CBOE Quarterly VIX Option Volumes2,0001,8001,6001,4001,2001,0008006004002001Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q18 QTD01,2001,0008006004002001Q152Q153Q15

42、4Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q18 QTD0Source: Company reports, OCC, UBS Notes: Average daily volume in 000sSource: Company reports, OCC, UBS Notes: Average daily volume in 000sLastly, the company highlighted its ongoing tech migration, with the main CBOE options market due to tran

43、sition on October 7. The company laid out a HYPERLINK /shared/d2ru3Yzq6HiAl very detailed schedule on synergies recently and will provide updates as it gains incremental confidence. CBOE also stressed that there should be new revenue opportunities in data once the platform is fully migrated.Speaking

44、 of expense growth more broadly, management highlighted that expenses have grown at a 4.7% CAGR and in a range of 3-6% over time. Last years growth was at the high end given strong business performance, but this year it should be contained to 2-4% given lower executive compensation. Things should be

45、 back to a higher normal in 2020, but management noted that it views the higher rate as conservatism.CME Group (CME)Figure 12: CME - Revenues by type (2019E)Commodities 10%Cash(NEX) Markets 11%Market data and information services 10%Metals 5%FX 4%Other Transaction Fees1%Other 7%Equities 13%Energy 15

46、%Interest Rates 24%Source: Company reports, UBS estimatesThe company remains excited about its prospects on the back of the NEX acquisition, which we had outlined in our HYPERLINK /shared/d2L8RIkr3GK Deep Dive in the past. The organizations have hit the ground running, platform migrations plans have

47、 been outlined, and the company is delivering against timeframes. Clients seem to be excited about new efficiencies and are coming forward with ideas/asks.While the platform migrations are still several quarters away, CME has identified several projects that it can deliver on independently. For exam

48、ple, EBS has several complexities today that could be eliminated already, while post- trade efficiencies could be gained across various asset classes. Cross-sell opportunities also exist independent of platform migrations.The company also recently made HYPERLINK /notices/clearing/2019/03/Chadv19-077

49、.pdf changes to its collateral fee schedule (effective July 1) that will increase charges for certain non-cash collateral from 1bps (annualized) to 5bps, among other things. We estimate that the change could drive some incremental $30-$40mm in annualized revenue (captured in the other revenue line).

50、The company is excited about the upcoming launch (May 2019) of its Micro E- mini futures. The new contract, which is 1/10th the size of a classic E-mini contract, is aimed at retail investors that may have had a more difficult time participating in CMEs equity index markets given the higher valuatio

51、n of the S&P 500. Retail has been a fast-growing segment for CME, growing at 28% last year to 660k contracts per day. Some 80 retail firms are active in CMEs markets today with growth in particular from Asia. Pricing was not disclosed but management highlighted that it should not be lower than tradi

52、tional contracts on a risk-adjusted basis. Note that retail pricing is also typically higher than for other market participants.Figure 13: CME Group Monthly VolumesFigure 14: CME Group Quarterly Volumes30,00025,00020,00015,00010,00025,00020,00015,00010,0005,0005,0000Feb-17 Mar-17 Apr-17 May-17 Jun-1

53、7 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-191Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q18 QTD0Interest Rates Equity Index Energy FX Commodities MetalsInterest Rates Equity Index Energy

54、 FX Commodities MetalsSource: Company reports, UBS Note: Average daily volume in 000s.Source: Company reports, UBS Note: Average daily volume in 000s.Intercontinental Exchange (ICE)Figure 15: ICE - Revenues by type (2019E)Listings 9%Exchange data 13%Desktops and connectivity 8%Other 5%Energy Futures

55、 19%Agricultural Futures5%Total Financial Futures6%US Equities 4%US Options 2%Pricing and analytics 21%Credit 3%Bilateral OTC and Other 5%Source: Company reports, UBS estimatesManagement remains highly confident in the outlook for its data business, stressing that there is absolutely no risk to its

56、4-6% organic growth guidance. Growth should be driven by the companys fixed income-related data offerings with legacy IDC growing 7%. Equities data ($120mm SIP, $100mm proprietary) will likely contribute little-to-no growth as pricing is constrained. Any growth would come from new products or higher

57、 tape share as market share has increased y/y.Figure 16: ICE Quarterly Data Services Revenue$600$500$400$300$200$100$01Q153Q151Q163Q161Q173Q171Q183Q181Q19EPricing and analyticsDesktops and connectivityExchange dataSource:On the fixed income data side, ICE highlighted its leadership position in prici

58、ng, reference data, and its growing index business. The company is also increasingly expanding into the front office, with newer offerings such as CEP (Continuous Evaluated Pricing). CEP has expanded its product coverage over the last few years, as it was just doing corporates when ICE bought IDC. T

59、o give one example, ICE rolled out a new real-time benchmark curve for Munis. Regulation also remains a tailwind (MiFID 2, SEC N-Port, new Asian rules). Lastly, the company noted that its desktop business is positioned to grow again after declining last year. That growth is driven by WebICE and Mess

60、enger, demonstrating ICEs focus on its core offerings in the segment.Fixed income was also a big topic on the transaction side. The company sees a large opportunity to create a comprehensive solution (including data) in fixedincome by combining all the businesses it has acquired. New tools such as t